Leslie Massey
Bahrain is a welcoming place for foreign investors, offering a simple and streamlined process for company formation. The country boasts a business-friendly environment, strategic location, and a favourable tax regime. The process of setting up a business in Bahrain can be broken down into three easy steps. First, investors must prepare the required documents, which can be determined using the Getting Your Business Set Up tool. Second, they should initiate the application process with the help of the EDB team. Finally, they will need to obtain initial approvals, including choosing a company name, selecting owners, shareholders, and directors, and deciding on a business structure. Once these steps are completed, investors will receive a Commercial Registration Certificate and will be ready to operate their business in Bahrain.
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What You'll Learn
Choosing a legal form
When choosing a legal form for your company in Bahrain, it's important to consider the future activities of the business as well as other factors such as the minimum share capital. The business form will determine the steps needed for registration, and more complex legal entities will have different requirements for issuing shares. Here are some of the main types of legal structures available in Bahrain:
Public Shareholding Company
Founded by at least two shareholders, who are only liable to the extent of their invested capital. The value of a share must be at least 100 Fils. This type of company requires a minimum capital of 1 million BD.
Closed Shareholding Company
Also founded by at least two shareholders, but unlike the public shareholding company, the closed shareholding company does not offer shares to the public. The capital requirement is 250,000 BD, with a share value between 100 Fils and 100 BD.
Limited Liability Company (LLC)
Can have a maximum of 50 partners, and they are only liable to the extent of their invested capital. There is no minimum share capital requirement, but the amount must be divided into equal shares valuing no less than 50 BD. This is the most common type of legal structure in Bahrain.
Joint Liability Company
Formed by two or more individuals who are jointly liable for the company's obligations. In the event of bankruptcy, all founders will also face bankruptcy.
Limited Partnership
Formed by one or more founders who are liable for the partnership's obligations, and one or more partners who have invested but are not part of the administration. These partners have limited liability, only up to the amount they have invested.
Company Limited by Shares
Formed by two types of founders: joint partners, who are fully liable for the company's debts and actions, and limited partners, who have limited liability up to the amount of their invested capital. The company must be formed by at least four members.
Single Person Company (SPC)
Owned by a single natural person who bears liability for the company's obligations only up to the extent of the value of their invested capital.
Foreign Branch and Representative Office
These are two business forms suited to foreign corporations. A foreign branch is an extension of the parent company, while a representative office cannot be used for commercial activities and only performs marketing and promotional activities.
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Choosing a company name
When choosing a company name, it is advisable to pick several names, as your first choice may not be available. If a name is available, it will be reserved with the Companies Register. The registration of a company name involves filing the appropriate documents, ensuring they meet the requirements set out by the Bahrain Commercial Registry with regards to the approval of a company name.
The Bahrain Commercial Registry will approve the name of your company, but there are a few things to keep in mind. Firstly, the name must be unique and cannot be similar to any existing company names. It is a good idea to search the registry of company names before deciding on a name to ensure that it is available. Additionally, the name should not be misleading or offensive, and it should not include any restricted words or phrases.
It is also important to consider the Arabic version of your company name. If your company will have any interaction with Arabic-speaking customers or partners, it is essential to choose an Arabic name that accurately reflects your brand and values. You may want to seek advice or feedback from Arabic speakers to ensure that the name is suitable and easily understandable.
Overall, choosing a company name is an important step in the process of setting up a company in Bahrain. By picking several names, ensuring they meet the requirements, and considering both English and Arabic versions, you can increase the chances of getting your preferred name approved by the Bahrain Commercial Registry.
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Drawing up company documents
To register a company in Bahrain, you will need to draw up company documents, including the Articles of Association and the By-Laws of the company. These documents will need to be included in the registration file. Here is a detailed breakdown of the process:
Articles of Association
The Articles of Association is a crucial document that outlines the rules and regulations that govern the internal management of a company. It defines the company's purpose, the responsibilities of its directors and shareholders, the procedures for holding meetings and making decisions, as well as the rights and obligations of its members. This document is essential for establishing the company's legal structure and ensuring its smooth operation.
When drafting the Articles of Association, it is important to consider the specific requirements of the company, including its business activities, ownership structure, and decision-making processes. It is recommended to seek legal advice to ensure compliance with Bahrain's Commercial Companies Law and other relevant regulations.
By-Laws
The By-Laws of a company are the internal rules and regulations that govern its day-to-day operations. These by-laws supplement the Articles of Association and provide detailed guidelines on various aspects of the company's functioning. They cover a range of topics, such as the roles and responsibilities of officers, employee conduct, meeting procedures, financial management, and any other matters pertinent to the company's operations.
By-Laws are important for maintaining order and consistency within the organization. They ensure that everyone involved in the company, from directors to employees, understands their roles, rights, and obligations. By-Laws also help protect the interests of the company and its stakeholders by establishing clear guidelines for decision-making and conflict resolution.
Additional Documents
In addition to the Articles of Association and By-Laws, there are other documents that may be required when registering a company in Bahrain. These include:
- Memorandum of Association: This document outlines the fundamental purpose and objectives of the company, as well as the rights and obligations of its members. It is often considered a supplement to the Articles of Association.
- Board of Directors' Resolution: This document records the decisions and resolutions made by the board of directors regarding the establishment of the company in Bahrain.
- Shareholders' Agreement: This agreement outlines the rights, responsibilities, and obligations of the company's shareholders. It covers aspects such as share ownership, decision-making, dividend distribution, and dispute resolution among shareholders.
- Certificate of Incorporation: The certificate officially recognizes the company as a legal entity and is issued by the relevant authority in Bahrain upon approval of the registration application.
- Lease Agreement: A lease agreement is required to provide proof of the company's commercial address.
It is important to note that the specific documents required may vary depending on the type of company being established and the nature of its business activities. It is always advisable to consult with legal professionals or business advisors familiar with Bahrain's regulatory framework to ensure compliance with all applicable laws and requirements.
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Making the capital deposit
The next step in the company formation process in Bahrain is to make the capital deposit. This involves depositing the minimum required capital for your chosen business structure into a corporate bank account. The specific amount required will depend on the type of company being formed, so it is important to research this beforehand. For example, the minimum capital requirement for a limited liability company is BD 20,000 (approximately USD 53,036), while for joint-stock companies, it is BD 250,000 (approximately USD 662,954).
To open a corporate bank account, you will typically need to provide additional documentation and may be required to appear in person at the bank. Once the deposit has been made, the bank will verify the transaction and issue a capital deposit certificate. This certificate is a crucial document and will be needed to finalise the company registration process.
It is important to note that the company's capital can be deposited in-kind, which refers to non-cash contributions such as property, equipment, or other assets. In such cases, these contributions must be audited, and an assessment certificate from an auditor or expert must be provided.
After making the capital deposit, the next step is to submit the application for registration electronically, along with copies of the personal identification documents of the founders and, if applicable, copies of the Articles of Association if the partners are other corporations.
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Filing for electronic registration
Once you have chosen a company name and drawn up the company documents, you can begin the process of filing for electronic registration. This is a simple process and can be done in five steps.
Firstly, submit the application electronically, either in person or through a professional intermediary. Secondly, obtain a security clearance if you are a foreign investor. Thirdly, attach the company documents, including the Articles of Association and the fundamental incorporation documents. Fourthly, attach proof of the capital deposit. Finally, attach any other documents that may be required, such as an assessment certificate from an auditor if the company's capital is in-kind, or any other documents specified by other authorities for obtaining special permits and licenses.
Once the application is submitted, it will be reviewed by the Ministry of Industry, Commerce and Tourism to confirm that the business is compliant.
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Frequently asked questions
The requirements for registering a company in Bahrain include choosing a legal form, picking a company name, drawing up company documents, making a capital deposit, and filing for electronic registration. The registration process usually takes 1-5 business days to complete.
The cost of registering a company in Bahrain is $7875, which includes the preparation of legal documents, company registration, payment of taxes and fees, and a legal address for the company for one year.
It takes approximately 12 weeks to complete the company registration process in Bahrain.
